Federal Circuit Archives - Page 4 of 75

Federal Circuit

Preliminary Injunction Upheld in Cancer Relapse Detection Case

by Tim Dunker | Jul 25, 2024 | Patents

The US Court of Appeals for the Federal Circuit affirmed the grant of a preliminary injunction (PI) in the biopharmaceutical space, concluding that the plaintiff satisfied the requirements for injunctive relief, including likelihood of success on the merits. The injunction included “carve outs” for patients requiring access to the affected cancer detection kits. Natera, Inc. v. NeoGenomics Laboratories, Inc. Case No. 24-1324 (Fed. Cir. July 12, 2024) (Moore, CJ; Taranto, Chen, JJ.)

Natera and NeoGenomics are both research-focused healthcare companies manufacturing products used for early detection of cancer relapse. Natera and NeoGenomics both offer products designed to identify circulating tumor DNA (ctDNA) within the bloodstream to assess the efficacy of cancer treatment and the risk of recurrence. NeoGenomics’s product is named RaDaR.

Natera owns two patents, one claiming methods for amplifying targeted genetic material, such as cfDNA, while reducing amplification of non-targeted genetic material, and the other claiming methods for detecting variations in genetic material indicative of disease or disease recurrence, such as ctDNA. Natera sued NeoGenomics, alleging that RaDaR infringed both of Natera’s patents, and moved for a PI. The district court granted the PI, finding that Natera satisfied the requirements for injunctive relief, including likelihood of success on the merits as set forth in Purdue Pharma v. Boehringer Ingelheim (Fed. Cir. 2001). The injunction barred NeoGenomics from making, using, selling, offering for sale, marketing, distributing or supplying RaDaR, with certain carve outs for patients already using RaDaR and for finalized or in-process research projects, studies and clinical trials.

To show a likelihood of success on the merits, Natera had to show that it would likely prove infringement and that its infringement claim would likely withstand challenges to the validity and enforceability of the patents. On appeal, NeoGenomics argued that the district court did not properly evaluate the likelihood of success on the merits factor because it failed to resolve a claim construction dispute and instead applied an erroneous construction.

The Federal Circuit noted that NeoGenomics first raised the erroneous claim construction issue in its motion to stay the PI pending appeal, and that neither party raised a claim construction dispute during the PI briefing. The Court therefore concluded that the district court did not abuse its discretion by not engaging in explicit claim construction before evaluating likelihood of infringement. The Federal Circuit also found that the district court did not err by implicitly construing the claims because Natera presented evidence suggesting that RaDaR’s multi-cycle polymerase chain reaction (PCR) process likely practiced the tagging and amplifying steps of the relevant claims.

NeoGenomics also argued that the district court applied an incorrect legal standard in evaluating NeoGenomics’s obviousness challenge, asserting that “mere ‘vulnerability’” of the patent to an invalidity challenge sufficed to defeat a PI. The Federal Circuit explained that the correct analysis addresses whether the patentee has shown that it is more likely than not to prevail over an invalidity challenge. The Court explained that it was not sufficient to merely allege that the individual elements of the claimed [...]

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Credibility at Issue? Court May Compel Party Representative to Appear In Person

by Sydney E. McDermott | Jul 25, 2024 | Patents

Addressing for the first time whether a district court can compel a witness to appear in person for testimony involving fraud on the court, the US Court of Appeals for the Federal Circuit affirmed the district court’s determination that it could require an in-person appearance of the sole corporate representative to make a credibility determination. Backertop Licensing LLC v. Canary Connect, Inc., Case Nos. 23-2367; -2368; 24-1016; -1017 (Fed. Cir. July 16, 2024) (Prost, Hughes, Stoll, JJ.)

During an underlying litigation, the US District Court for the District of Delaware identified potential party and attorney misconduct in dozens of patent cases related to IP Edge and Mavexar, a patent monetization firm and an affiliated consulting firm, respectively. The district court found that IP Edge and Mavexar appeared to have created LLCs, recruited individuals to serve as the sole owners, assigned patents to the LLCs for “little or no consideration,” and recorded the complete assignment of patent rights without disclosing that IP Edge and Mavexar retained significant rights to the royalties and to any settlement proceeds resulting from litigation of the assigned patents. The LLCs then filed lawsuits asserting the rights of their assigned patents without reporting the significant rights retained by IP Edge and Mavexar.

The district court conducted an evidentiary hearing to “gather more information about its concerns” over potential professional misconduct violations and real parties in interest not being identified. One of the parties was Backertop Licensing LLC and its sole owner, Lori LaPray. The district court ordered the production of documents related to the potential fraud on the court and a declaration identifying “any and all assets owned by Backertop.” Shortly thereafter, Backertop filed a joint stipulation of dismissal, and two attorneys for Backertop sought to withdraw from their representation. The district court’s investigation continued, however, and Backertop’s “allegedly responsive production” contained documents, several of which “had clearly missing attachments or cover letters.”

Left unsatisfied with the production, the district court ordered LaPray to appear in person for a hearing to “assess her credibility.” Citing preexisting travel plans, a busy work schedule and childcare obligations, LaPray notified the court that she was unable to attend the hearing as scheduled and requested to appear telephonically instead. The district court moved the hearing date to accommodate LaPray’s travel schedule but required in-person appearance because “[c]redibility assessments are difficult to make over the phone.” Backertop argued, for the first time, in its motion for reconsideration that the court’s order was precluded under the Federal Rule of Civil Procedure 45 geographic limit. The district court rejected the argument because Rule 45 does not limit the court’s inherent power to order parties to appear sua sponte. After failing to appear at the rescheduling hearing and the show cause hearing, the district court held LaPray in civil contempt and imposed a $200 per day fine until she appeared in person in court. Backertop and LaPray appealed.

The Federal Circuit concluded that Rule 45’s geographic limit only applies to a party or attorney’s efforts [...]

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House Rules: Remote Gambling Activity Claims Go Bust

by Cecilia Choy, Ph.D. | Jul 18, 2024 | Patents

The US Court of Appeals for the Federal Circuit applied the Alice/Mayo framework to assess whether claims directed to remote gambling were patent eligible under 35 U.S.C. § 101 and determined that the claims were directed to a patent-ineligible abstract idea and did not otherwise recite an inventive concept. Beteiro, LLC v. DraftKings Inc., Case Nos. 22-2275; -2277; -2278; -2279; -2281; -2283 (Fed. Cir. June 21, 2024) (Dyk, Prost, Stark, JJ.)

Beteiro owned several patents related to facilitating live gaming and/or gambling activity at a gaming venue remote from the user’s physical location so that a user can participate via a communication device away from the gaming venue location. In 2021 and 2022, Beteiro filed at least six patent infringement cases against the defendants. The district court granted the defendants’ motions to dismiss the claims on the grounds that the asserted claims were patent ineligible under § 101. Beteiro appealed.

The Federal Circuit agreed with the district court’s assessment of the claims under the first step of the Alice/Mayo framework and found that the claims “exhibit several features that are well-settled indicators of abstractness”:

The claims “broadly recited generic steps of a kind” frequently held to be abstract, such as “detecting information, generating and transmitting a notification based on the information, receiving a message (bet request), determining (whether the bet is allowed based on location data), and processing information (allowing or disallowing the bet).”
Claims like these, e., drafted with largely “result-focused functional language” without specifying how the purported invention achieves those results, are “almost always found to be ineligible.”
Citing earlier decisions, the Court found broadly analogous claims were abstract as involving methods of providing particularized information to individuals based on their locations. The Court also noted in a footnote that several district courts have found remote-gaming patents analogous to Beteiro’s patents ineligible.
The claimed methods were similar to “fundamental practices long prevalent,” an indicia that they are abstract and unpatentable. For example, the Federal Circuit referred to the district court’s analogy to real-world activities, including one step in the claims where “those accepting bets have always had to confirm that the bettor with whom they were dealing was located in a place where gambling was allowed.”

The Federal Circuit also agreed with the district court’s analysis of the second step of the Alice/Mayo framework and its conclusion that the claims failed to provide an inventive concept and “simply describe[d] a conventional business practice executed by generic computer components.” The Court disagreed with Beteiro’s argument that there was genuine dispute as to whether using geolocation and global positing as an “integral data point” in processing mobile wagers was conventional technology at the time of the earliest claimed priority date, 2002. Beteiro only briefly referred to conventional use of GPS in connection with several types of conventional computers but failed to describe differences between equipping GPS on a mobile phone versus any other described conventional computers. The asserted patents did not describe any advanced GPS mobile device technology [...]

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Is Pleading “Generic” Enough to Plead Inducement?

by Christopher M. Bruno | Jul 11, 2024 | Patents

The US Court of Appeals for the Federal Circuit held that a branded pharmaceutical manufacturer properly pled a theory of inducement by alleging that the generic competitor promoted its product as “generic” to the branded product and referred to the branded product’s sales for patented uses. Amarin Pharma Inc. v. Hikma Pharmaceuticals USA Inc., Case No. 23-1169 (Fed. Cir. June 25, 2024) (Moore, Lourie, Albright, JJ.)

Amarin Pharmaceuticals sells the drug Vascepa, which the US Food and Drug Administration (FDA) approved for two uses:

To treat severe hypertriglyceridemia.
As an adjunct therapy to reduce certain cardiovascular risks.

In 2016, Hikma submitted an abbreviated new drug application (ANDA) to market a generic version of Vascepa, which at the time was only approved for treatment of severe hypertriglyceridemia. Hikma and Amarin then litigated patents covering Vascepa under the Hatch-Waxman Act, with Hikma invalidating the patent claims covering the severe hypertriglyceridemia indication. After Amarin obtained approval for its second indication, Hikma submitted to the FDA a “section viii carve out” (i.e., prescribing information that purposedly did not include the second indication). The FDA approved Hikma’s product, which was sold with a “skinny label.” After Hikma’s ANDA was approved, Hikma issued a series of press releases that referred to its product as a “generic” version of Vascepa, even though the product was not approved for the cardiovascular risk indication. The press releases also referred to Vascepa’s annual sales as approximately $1.1 billion – the amount of Vascepa scales for all uses – as well as its usage information.

Amarin sued Hikma again for patent infringement, this time claiming that Hikma induced infringement of patents covering the cardiovascular risk indication. The district court overruled the magistrate judge’s recommendation and concluded that Amarin’s complaint did not plead a plausible case of induced infringement. Amarin appealed.

The Federal Circuit reversed. First, it explained its view that the case was a “run-of-the-mill” inducement infringement case, rather than one governed by the Hatch-Waxman Act framework. Emphasizing the deferential plausibility standard applicable at the pleadings stage, the Court held that, combined with allegations that Hikma’s label included warnings that would promote infringement, Amarin’s averments about Hikma’s press releases were sufficient at this stage to plausibly claim that Hikma induced infringement of the cardiovascular risk limitation by its references to the branded product.

The Federal Circuit also rejected Hikma’s claim that a ruling in Amarin’s favor would “effectively eviscerate section viii carve-outs.” The Court explained that its ruling was an ordinary application of induced infringement that promotes scrutiny of generic companies’ communications for clarity and consistency.

Practice Note: This case continues the trend of inducement cases that has received renewed interest after GlaxoSmithKline v. Teva Pharmaceuticals. Branded pharmaceutical manufacturers may be emboldened to sue after launch based on theories of inducement where section viii carveouts were employed.

E for Effort? PI Analysis in Trade Secret Suit Riddled With Errors

by Tessa Kroll | Jun 27, 2024 | Trade Secrets

The US Court of Appeals for the Federal Circuit reversed the granting of a sweeping preliminary injunction (PI) in a trade secret suit against a competitor, finding that the district court’s analysis failed to consider potentially dispositive issues and the requirements of the Defend Trade Secrets Act (DTSA). Insulet Corp. v. EOFlow, Co., Case No. 24-1137 (Fed. Cir. June 17, 2024) (Lourie, Prost, Stark, JJ.) Among other things, the district court:

Failed to consider whether the plaintiff’s claims were time-barred.
Used an incorrect definition of “trade secret.”
Based its irreparable harm analysis on an unsubstantiated fear of a competitor’s potential acquisition of the defendant.
Failed to meaningfully assess the balance of harm and the public interest factors.

Insulet and EOFlow are medical device manufacturers that make insulin pump patches. Insulet began developing its OmniPod product in the early 2000s and launched next-generation models in 2007 and 2013. EOFlow began developing its own insulin pump product, the EOPatch, in 2011 and began work on its second-generation product in 2017. Around the time that EOFlow began developing its second-generation device, four Insulet employees joined EOFlow.

In early 2023, Medtronic allegedly started a diligence process to acquire EOFlow. Shortly thereafter, Insulet sued EOFlow for trade secret misappropriation, seeking an injunction to bar all technical communications between EOFlow and Medtronic. The district court granted Insulet’s request, finding that Insulet was likely to succeed on its trade secret claim because EOFlow had hired former Insulet employees who retained Insulet’s confidential documents, and Medtronic’s intended acquisition of EOFlow would cause irreparable harm to Insulet. The injunction broadly prevented EOFlow from “manufacturing, marketing, or selling any product that was designed, developed, or manufactured, in whole or in part, using or relying on the Trade Secrets of Insulet.”

EOFlow appealed the injunction. EOFlow argued that the district court failed to address whether Insulet’s claim was time-barred under 18 U.S.C. § 1836(d) of the DTSA and to consider factors relevant to Insulet’s likelihood of success or meaningfully assess the balance of harm and public interest factors.

The Federal Circuit first observed that the district court had expressed no opinion regarding EOFlow’s § 1836(d) statute of limitations (SoL) argument, even though Insulet’s compliance with the SoL was a material factor that would significantly impact Insulet’s likelihood of success. This alone constituted an abuse of discretion meriting reversal.

The Federal Circuit found that even if the district court had addressed the SoL, the injunction was not adequately supported. The Federal Circuit explained that the district court had improperly and broadly defined “trade secret” as “any and all Confidential Information of Insulet,” where “Confidential Information” was defined by the district court to mean any materials marked “confidential” as well as any CAD files, drawings or specifications. The Federal Circuit explained that the district court should have required Insulet to define the allegedly misappropriated trade secrets with particularity. Instead, the district court allowed Insulet to “advance a hazy grouping of information” and stated that “it would be unfair to require at [...]

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New Arguments Yield Same Unpatentability Outcome

by Karen Gover | Jun 13, 2024 | Patents

On remand from the US Court of Appeals for the Federal Circuit in connection with inter partes review (IPR) proceedings, the Patent Trial & Appeal Board considered the petitioner’s reply arguments and evidence regarding the claim constructions that were first proposed in the patent owner’s response but again found that the claims were not unpatentable. Axonics, Inc. v. Medtronic, Inc., IPR2020-00712; -00680 (May 30, 2024) (Tartal, Jeschke, Dougal, APJ)

Axonics filed IPR petitions challenging two patents owned by Medtronic that are directed to the transcutaneous charging of implanted medical devices. In its petitions, Axonics did not propose any express claim constructions. In its preliminary response, Medtronic agreed that claim construction was not necessary. In its patent owner response, however, Medtronic – for the first time – advanced a new claim construction that differed from the interpretation of the relevant claims implied in Axonics’s claim charts. Axonics defended its own implicit construction but also offered new arguments and evidence that the prior art anticipated the patents even under the alternative construction. The Board adopted Medtronic’s new claim construction but refused to consider Axonics’s new arguments and evidence because they were first presented in the reply. The Board then found that Axonics failed to show by a preponderance of the evidence that the challenged claims were unpatentable. Axonics appealed.

Axonics did not dispute the new claim construction first introduced by Medtronic in its response and adopted by the Board; it argued only that the Board erred in refusing to consider its reply arguments and evidence under the new construction. The Federal Circuit agreed, concluding that in such a situation, “a petitioner must be given the opportunity in its reply to argue and present evidence of anticipation or obviousness under the new construction, at least where it relies on the same embodiments for each invalidity ground as were relied on in the petition.” The Court remanded for the Board to consider Axonics’s new arguments.

On remand, the Board considered Axonics’s new arguments and evidence that the challenged claims were unpatentable over the prior art under the new construction. It also considered Medtronic’s amended sur-reply. The Board again determined that none of the challenged claims were unpatentable. In its analysis, the Board pointed out that some of Axonics’s new arguments and evidence regarding what the prior art disclosed in light of the new claim construction were inconsistent with the arguments and evidence it initially offered in its petition. In particular, the Board observed that the declaration testimony of Axonics’s expert regarding the prior art, on which Axonics relied in its petition, did not support the new claim construction, even considering the expert’s supplemental declaration. The Board also rejected Axonics’s attempts in its post-remand brief to discredit Medtronic’s arguments as “untimely and wrong,” “incorrect” and “contradictory of the positions on infringement it has taken in district court.” Citing the Federal Circuit, the Board pointed out that in an IPR, the burden of persuasion to prove unpatentability by a preponderance of the evidence [...]

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The $X Factor: Demystifying Damages Calculations

by Keval Amin | Jun 13, 2024 | Patents

The US Court of Appeals for the Federal Circuit affirmed a district court’s decision to deny a defendant’s motion for a new trial on damages, finding that the plaintiff’s damages expert sufficiently showed that prior license agreements were economically comparable to a hypothetically negotiated agreement between the parties. EcoFactor, Inc. v. Google LLC, Case No. 23-1101 (Fed. Cir. June 3, 2024) (Reyna, Lourie, JJ.) (Prost, J., dissenting).

EcoFactor owns a patent directed to mitigating strain on the electricity grid by adjusting thermostat settings within HVAC systems. The patent describes a system where thermostats collect internal temperature readings and use them alongside external temperatures to estimate internal temperature change rates, including future predictions. EcoFactor sued Google alleging infringement based on Google’s Nest smart thermostat products.

After discovery, Google sought summary judgment, arguing that claims of EcoFactor’s patent were invalid as abstract ideas under 35 U.S.C. § 101. The district court denied this motion as well as Google’s Daubert motion to exclude the testimony of EcoFactor’s damages expert. At trial the jury found that Google infringed EcoFactor’s patent and awarded damages. The district court denied Google’s subsequent motions for judgment as a matter of law on noninfringement and for a new trial on damages. Google appealed.

Google raised three key issues. First, it argued that the district court erred in denying its motion for summary judgment. Second, Google asserted that the district court erred in denying its motion for judgment as a matter of law concerning the noninfringement of EcoFactor’s patent. Third, Google claimed that the district court wrongly denied its motion for a new trial on damages, arguing that EcoFactor’s damages expert opinion was based on unreliable methodology.

The Federal Circuit upheld the district court’s decision to deny summary judgment because there were genuine issues of material fact warranting a trial. The Court also affirmed the jury’s infringement verdict against Google, finding that it was supported by substantial evidence. Despite Google’s argument that its Nest thermostats did not meet the claims of EcoFactor’s patent, the Court concluded that expert testimony and corroborating documentation demonstrated otherwise.

On the damages issue, Google argued that EcoFactor’s expert testimony was unreliable because there was no evidence that the parties to the three license agreements used by the expert actually applied the royalty rate stated in the agreement. While Google acknowledged that each of the license agreements include a specified royalty rate, Google argued that each also included a “whereas” clause indicating that the licensee would pay EcoFactor a lump sum amount “set forth in this Agreement based on what EcoFactor believes is a reasonable royalty calculation of [$X] per-unit for . . . estimated past and [] projected future sales of products accused of infringement in the Litigation.” Google asserted that while the agreements may have included a stated rate, there was no evidence that the agreements actually applied the rate in calculating the lump sum payment.

The Federal Circuit rejected Google’s argument. The Court explained that the proposed royalty rate was derived from three [...]

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Interference Analysis Is a Two-Way Street

by Jacob Michael Bass | Jun 6, 2024 | Patents

On appeal from an interference proceeding, the US Court of Appeals for the Federal Circuit reversed a Patent Trial & Appeal Board decision that found the claims of the senior party’s patent were not invalid as time-barred under 35 U.S.C. § 135(b)(1). The Federal Circuit concluded that the “two-way test” requires looking to see if either set of pre-critical and post-critical date claims contains a material limitation not found in the other and not just looking to see if the post-critical date claims have additional material limitations. Speck et al. v. Bates et al., Case No. 22-1905 (Fed. Cir. May 23, 2024) (Dyk, Bryson, Stoll, JJ.)

35 U.S.C. § 135(b)(1), pre-AIA, provides that “a claim which is the same as, or for the same or substantially the same subject matter as, a claim of an issued patent may not be made in any application unless such a claim is made prior to one year from the date on which the patent was granted.” This has been described as a statute of repose that places a time limit on a patentee’s exposure to an interference, the deadline for which is referred to as the “critical date.” At issue in this appeal was the “long-standing” exception to § 135(b)(1) for instances where the applicant files its claim after the critical period but has already been claiming substantially the same invention as the patentee during the critical period.

This case involves drug-coated balloon catheter technology. Bates is the senior party that filed a patent application, and Speck is the junior party that owns an issued patent. Speck’s patent issued on September 4, 2012, whereas Bates filed his application on August 29, 2013, six days before the critical date of Speck’s patent (i.e., one year after the filing date). Bates amended the application on August 30, 2013 (still before the critical date), and canceled all of the original claims and replaced them with new claims. Bates later amended the claims after the critical date to add a requirement that the device be “free of a containment material atop the drug layer.” The amendment was made to overcome a rejection from the examiner during prosecution.

Speck filed a motion to terminate the interference on the ground that the claims of Bates’s application were time-barred under § 135(b)(1) because Bates amended the claims more than one year after Speck’s patent issued. Speck also moved the Board to find that the claims of Bates’s application were unpatentable for lack of written description.

The Board denied Speck’s motion to terminate under § 135(b)(1), finding that the later-amended claims did not differ materially from the claims in other patents and patent applications Bates owned that were filed prior to the critical date, because “Speck ha[d] not directed [the Board] to a material limitation of the Bates involved claims that is not present in the earlier Bates claims.” Speck filed a motion for rehearing, which the Board denied. The Board also denied Speck’s motion to find that Bates’s claims lacked [...]

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Sour Grapes: Winery Minority Ownership Insufficient for Statutory Standing at Trademark Board

by Karen Gover | May 30, 2024 | Trademarks

The US Court of Appeals for the Federal Circuit affirmed the dismissal of a petition seeking to cancel the registered marks of two wineries, finding the petitioner (a trust owning an interest in a competitor winery) lacked statutory standing under 15 U.S.C. § 1064. Luca McDermott Catena Gift Trust v. Fructuoso-Hobbs SL, Case No. 23-1383 (Fed. Cir. May 23, 2024) (Lourie, Reyna, Chen, JJ.) (en banc). The Court found that while the cancellation petitioner, Luca McDermott, had Article III standing to seek judicial review of the Trademark Trial & Appeal Board’s decision, it did not have statutory standing under the Lanham Act to petition for cancellation of the registrations at issue.

Paul Hobbs is a winemaker and partial owner of California-based Paul Hobbs Winery. The Paul Hobbs Winery owns the registration for the PAUL HOBBS mark in International Class 33 for “Wines.” Luca McDermott and two other related family trusts are each limited partners of the winery, collectively owning more than 21% of the business. Paul Hobbs is also affiliated with two other wineries: Fructuoso-Hobbs, a Spanish winery and owner of the registered mark ALVAREDOS-HOBBS, and New York winery Hillick & Hobbs Estate, owner of the registered mark HILLICK AND HOBBS. Both marks are registered in International Class 33 for “Alcoholic beverages except beers; wines.”

Luca McDermott and the other two family trusts petitioned to cancel both of the registered marks on the grounds of likelihood of confusion, alleging that the use of the ALVAREDOS-HOBBS and HILLICK AND HOBBS marks in connection with wine was likely to cause confusion with the Paul Hobbs Winery’s use of the PAUL HOBBS mark for wine. The trusts also alleged that Fructuoso-Hobbs committed fraud because it caused its lawyer, the same lawyer of record who managed the registration of the Paul Hobbs Winery’s PAUL HOBBS mark, to declare that the marks would not be likely to cause confusion with another mark.

Fructuoso-Hobbs moved to dismiss the petition, arguing that the family trusts were not entitled by statute to bring the cancellation action because they were not the owners of the PAUL HOBBS mark. Fructuoso-Hobbs also argued that the trusts could not show they had the necessary “proprietary interest” to bring the likelihood of confusion claim. The Board granted the motion to dismiss. Luca McDermott, one of the three trusts in the original action, appealed.

Before it could review de novo the Board’s decision regarding the trust’s lack of standing under the Lanham Act, the Federal Circuit addressed whether the trust had Article III standing to seek judicial review of the Board’s decision. The Court had little trouble concluding that the alleged injury (i.e., the diminished value of the trust’s investment in the winery) constituted an individual injury-in-fact, even for a minority partner. Furthermore, the Court found that the causation requirement was satisfied because the constitutional standard did not require proximate causation but only that the injury be “fairly traceable” to the allegedly unlawful registration of the challenged marks. Finally, the Federal Circuit found it [...]

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No Attorneys’ Fees Available for Successful IPR in Parallel Court Proceedings

by Lillian Spetrino | May 30, 2024 | Patents

The US Court of Appeals for the Federal Circuit concluded that a party that voluntarily elects to pursue parallel proceedings before the Patent Trial & Appeal Board and the district court is not entitled to recover attorneys’ fees under 35 U.S.C. § 285 (exceptional case doctrine) in connection with the Board proceedings, nor does § 285 entitle a party to hold opposing counsel jointly and severally liable for fees. Dragon Intellectual Property LLC v. Dish Network L.L.C., Case Nos. 2022-1621; -1777; -1622; -1779 (Fed. Cir. May 20, 2024) (Moore, C.J.; Stoll, J.) (Bencivengo, J., dissenting).

Dragon sued DISH Network, Sirius XM Radio (SXM) and eight others for patent infringement. The district court stayed proceedings as to DISH and SXM while they pursued inter partes review (IPR) but proceeded with claim construction for the other defendants. Following claim construction, all parties stipulated to noninfringement, and the district court accordingly entered a noninfringement judgment that was subsequently vacated following appeal to the Federal Circuit. Following the Board’s determination that the asserted claims were unpatentable, DISH and SXM filed a motion for attorneys’ fees in the district court proceeding. The district court granted the motion for time spent litigating the district court case but denied for fees incurred solely during the IPR proceedings and recovery from Dragon’s former counsel. DISH and SXM appealed the denial-in-part, and Dragon cross-appealed the grant-in-part.

The Federal Circuit affirmed the district court’s grant-in-part, finding that the district court did not abuse its discretion in declaring these cases exceptional. The Federal Circuit explained that the vacated noninfringement judgment did not require the district court to ignore its claim construction order in determining exceptionality. The Court further explained that even though Dragon was not entitled to a claim construction “do-over,” the prosecution history disclaimer issue was independently considered during the exceptionality inquiry, and Dragon did not provide any grounds for the conclusion that this constituted an inadequate inquiry.

The Federal Circuit also affirmed the denial of attorneys’ fees with regard to fees incurred during the IPR proceedings and Dragon’s former counsel’s liability for fee awards under § 285.

First, the Federal Circuit rejected DISH and SXM’s argument that § 285 allows recovery of fees incurred during parallel IPR proceedings, principally on the grounds that the IPR proceedings were pursued voluntarily. The Court reasoned that there are many advantages to leveraging IPR proceedings and, therefore, “where a party voluntarily elects to pursue an invalidity challenge through IPR proceedings, we see no basis for awarding IPR fees under § 285.”

Second, the Federal Circuit relied on the statutory text and determined that liability for attorneys’ fees awarded under § 285 does not extend to a party’s counsel. The Court explained that while other statutes explicitly allow parties to recover costs and fees from counsel, § 285 is silent as to who can be liable for a fee award, and therefore it is reasonable to conclude that fees cannot be assessed against counsel.

Sitting by designation, Judge Bencivengo of the US District Court for the Southern District of California dissented [...]

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